The World Container Index’s composite index, an average of spot freight rates on 11 global East-West routes connecting Asia, Europe and the US, reached a record low of US$701 per 40-foot container on March 10, says Drewry Shipping Consultants.
This was the lowest reading since the World Container Index (WCI) starting tracking weekly transatlantic, transpacific and Asia-Europe rates in June 2011.
“The World Container Index’s composite index is now 60% lower than the average of the past 5 years and has decreased by 62% in the past year,” said Richard Heath, director of WCI.
Jonathan Chappell, an analyst at Evercore ISI in New York says that there’s been an arms race in building bigger and bigger ships and they’re coming at a time the economy is slowing.
An oversupply of massive new container ships serving the China-to-Europe routes has pushed smaller ships to the Atlantic Ocean and depressed rates between North America and Europe, said Andrew Abbott, chief executive officer of Atlantic Container Line (Canada) Ltd.
He calls the plunge in container rates “a bloodbath.”
The cost of shipping industrial commodities such as coal, ore and grain recently hit record lows, according to the Baltic Dry Index.
Philip Damas, director at Drewry, said: “Rate reductions are spreading across all routes, as the shipping market continues to soften. This is good news for shippers’ cost budgets, as the latest average index value of $701 per 40ft represents an expense of less than 10 cents per km and makes products competitive even in remote markets.”